It seems odd for an economic developer to be urging caution when it comes to cutting corporate tax rates. But that is exactly what I am doing. This new survey proves my point.
Halifax compared well with other cities around the world in a new tax competitiveness study by KPMG LLP. The study compared income tax, capital tax, sales tax, property tax, local business taxes and statutory labour costs faced by companies in 102 cities in 10 countries. Scores were determined as a percentage of total taxes paid by corporations in the United States. A lower score meant lower tax costs for businesses.
KPMG managing partner Greg Wiebe said in an interview Monday that Halifax and other Atlantic cities — including St. John’s, N.L., Moncton and Fredericton — that scored well in the study benefited from having the harmonized sales tax, which he called a true value-added tax.
“From a business perspective, there is no cost to a particular business,” he said, noting that HST costs are borne by the end user. “That’s not true in other places. Cities under the HST have a very competitive rate.” St. John’s scored 59.1, while Moncton scored 62.6 and Fredericton scored 62.8 in the KPMG study.
Vancouver scored 75.2, Montreal 83.2 and Toronto 85.4.
For overall business taxes, New Brunswick is already well below the larger urban centres in Canada. Don’t make deep cuts to corporate income taxation. Use the money to invest in other areas that badly need investment such as R&D, energy and other infrastructure.